Coronavirus affects Uganda’s private sector activity

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Mombasa Port

Uganda’s business flow has been slowed by the outbreak of coronavirus in China, according to a survey of purchasing managers’ activity released on Wednesday.

The survey indicates that the outbreak has greatly affected the supply of goods from China seeing Uganda’s private sector expand at its slowest pace in five months in February 2020.

A Stanbic Bank Uganda Purchasing Managers’ Index (PMI), a monthly survey of business conditions in Uganda’s private sector fell from 58.8 in January to 56.2 in February.

IHS Markit said this is the slowest since September 2019.

Readings above 50 show an expansion in business activity and vice versa.

IHS Markit said despite the expansion of business activity across all sectors driven by improved customer demand last month, higher input costs and the result prices of output weighed on the private sector PMI.

It added that higher input costs were registered last month with rising prices for electricity, water, crops and all products from China due to the outbreak of coronavirus there. The outbreak affected the supply of some goods while prices of output continued to rise. The regional economist for East Africa at Stanbic Bank’s global markets unit, Mr Jibran Qureishi said:“The coronavirus outbreak remains the most notable downside risk to economic growth over the next six months. Not only could output prices rise due to importing raw materials and other finished goods from more expensive alternatives other than China, but general trade could also ease due to this outbreak.”

However, the report said that business managers are confident that private sector output will rise over the next 12 months supported by business expansion plans, greater marketing and expectations of further growth in new orders.

Map showing Mombasa Port.

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